Can City Wide require a transferee to guarantee the obligations of the franchisee?

According to City Wide's 2025 Franchise Disclosure Document, City Wide has the right to require a transferee to guarantee the franchisee's obligations. Specifically, City Wide may require any transferee of shares or interests in the franchisee, any affiliated company, or the owner and their spouse or domestic partner to guarantee the franchisee's obligations under the Franchise Agreement. This also applies to any new Franchise Agreement entered into pursuant to Section 13.4.10.

This provision means that if a franchisee decides to sell their City Wide franchise, the potential buyer (transferee) might have to sign a guarantee, ensuring they will cover all the original franchisee's responsibilities and debts to City Wide. This guarantee could cover various obligations, including fees, expenses, and other liabilities arising from the Franchise Agreement.

For a prospective franchisee, this is an important consideration when planning for a future sale or transfer of the franchise. It could affect the pool of potential buyers, as some may be unwilling to take on such a guarantee. Franchisees should be aware of this requirement and discuss it with potential transferees early in the sale process. It is also important to understand the full scope of the obligations that the transferee would be guaranteeing to avoid any surprises or disputes during the transfer process.